Cloudyn Whitepaper: “The Great Hope of Cloud Economics and the Over-Provisioning Epidemic”

March 13 2012 | by Zev Schonberg Cloud Cost, Cloud Economics

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Today we published a new whitepaper that outlines how organizations can maximize their cloud investment and dynamically optimize the balance between operational and financial objectives of using the cloud. In the whitepaper, we define cloud economics and perfect-provisioning and offer cloud users a checklist for cloud cost efficiency.

People move to the cloud for agility and to save money, but in reality, costs quickly add up to much more than anticipated. As James Staten, Vice President and Principal Analyst at Forrester Research, Inc. wrote in his April 2011 “The Three Stages Of Cloud Economics” research report, “We all believe that cloud computing can save us money but aren’t sure how to maximize these savings.

Cloudyn’s whitepaper explores how businesses of all sizes can gain more insight into the cloud via an understanding of the economics of the cloud environment.

Our technological approach provides cost visibility, control and optimization for cloud customers working to get a handle on those costs.

Excerpt from “The Great Hope of Cloud Economics and the Over-provisioning Epidemic”:

Understandably, the enticing combination of agility, scalability and cost savings has attached a great deal of hope to the economically favorable potential of cloud computing. In 2011, however it became evident that the math of cloud economics might still be somewhat in need of some refinement. It turns out that cloud resource deployments can’t always be characterized or allocated using simple models – and the complexity of cloud pricing and provisioning is quickly moving beyond human capacity to comprehend, much less act upon.

For many applications, ensuring operational performance (SLA-type performance assurances) means choosing to over-provision cloud resources with enough of a safety margin to ensure performance requirements are always met. This is colloquially known as the “so-I-can-sleep-at-night” approach to cloud provisioning.

It has been historically impossible to know exactly how much safety margin is required at any one point in time, much less in a variable fashion as resource demands change dynamically. A common choice, therefore, has been to over-provision cloud computing resources by excessive amounts in order to be absolutely certain that performance demands will be met.

Over-provisioning of cloud resources has, in the absence of other choices, become an epidemic. The result is that many organizations are investing in cloud resources they simply do not use. Unused resources produce, of course, a return on investment (ROI) of exactly zero.

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